Archived — Quarterly Financial Report — Quarter ended December 31, 2015

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Statement outlining results, risks and significant changes in operations, personnel and programs


1. Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by Treasury Board Accounting Standard 1.3. This report should be read in conjunction with the Main Estimates and Supplementary Estimates A and B. This quarterly report has not been subject to an external audit or review.

Authority, Mandate and Program Activities

As Canada's most populous region—home to more than 12.8 million residents living in 288 communities—southern Ontario is a key contributor to the Canadian economy. The Government of Canada created the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) in Budget 2009. FedDev Ontario's mandate is to support economic growth and competitiveness in southern Ontario. As one of the federal departments and agencies that make up the Innovation, Science and Economic Development portfolio, FedDev Ontario supports a number of the Government of Canada's commitments, including helping Canadian businesses grow, innovate and export in order to create good-quality jobs and wealth for Canadians; and working with stakeholders to improve the impact of programs to support innovation and entrepreneurship.

Further details on FedDev Ontario's authorities, mandate and program activities can be found in the 2015–16 Report on Plans and Priorities and Part II of the Main Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes FedDev Ontario's spending authorities granted by Parliament and those used by FedDev Ontario—consistent with the Main Estimates and Supplementary Estimates A and B. This quarterly report has been prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the government. Approvals are given in the form of annually approved limits through appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.

FedDev Ontario uses the full accrual method of accounting to prepare and present its annual financial statements that are part of its performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results

This section highlights the significant items that contributed to the net increase or decrease in authorities available for the year and actual expenditures for the quarter ended December 31, 2015.

2.1 Authorities Analysis

Planned departmental spending in fiscal year 2015–16 totals $216.5 million, an $8.5 million increase over that available at the close of the third quarter in the 2014–15 fiscal year. This comprises an $8.6 million increase in program authorities and a $0.1&million decrease in operating authorities.

The $8.6 million increase in program authorities is the result of an increase to the Advanced Manufacturing Fund ($12 million) and a decrease to the Southern Ontario Prosperity Initiatives ($3.4 million), both representing funding that was reprofiled from 2014–15 to 2015–16.

More than 85 percent of FedDev Ontario's planned spending is allocated to program authorities (grants and contributions). The remaining 15 percent is used to fund the operation of the Agency in areas such as program delivery, communications, policy development, finance and human resources. This funding is also used to support FedDev Ontario's efforts as a convener and champion within southern Ontario.

Figure: Total authorities available for use for the year ending March 31, 2016, compared to total authorities available for use for the year ending March 31, 2015 (in millions of dollars)

Bar chart of Total authorities available for use for the year ending March 31, 2016, compared to total authorities available for use for the year ending March 31, 2015 (in millions of dollars) (the long description is located below the image)
Description of Figure
Total authorities available for use for the year ending March 31, 2016 compared to total authorities available for use for the year ending March 31, 2015 (in millions of dollars)
type of authorities  Fiscal Year
(in millions of dollars)
2014–15 2015–16
Operating Spending Authorities 30.4 30.3
Program Spending Authorities 177.6 186.2

2.2 Expenditure Analysis

Used During the Quarter

In the third quarter of the 2015–16 fiscal year, total budgetary expenditures were $47.0 million, compared to $19.8 million reported in the same period of 2014–15. This represents a year-over-year increase of $27.2 million, or 137 percent.

Quarterly spending includes $40.1 million on transfer payments and $6.9 million on operating expenditures. Compared to the same period in 2014–15, transfer payment expenditures have increased by $28.4 million and spending on operating costs has decreased by $1.2 million.

Year-to-Date Analysis

On a year-to-date basis, as of the end of the third quarter of fiscal year 2015–16, total budgetary expenditures were $104.1 million, compared to $43.9 million at the end of the same period for 2014–15. This represents a year-over-year increase of $60.2 million (or 137 percent). This increase is primarily attributed to higher expenditures in grants and contributions during the current fiscal year as projects progressed, resulting in many project-related claims being submitted and reimbursed.

Statement of Departmental Budgetary Expenditures by Standard Object

The following provides additional analysis of key variances at the Standard Object level.

Used During the Quarter

Spending on transfer payments was $40.1 million in the third quarter of 2015–16, compared to $11.7 million in the same quarter of 2014–15. The reason for the variance is that 2014–15 was the beginning of the Agency's second mandate: the project intake cycle for the new suite of funding initiatives had just opened, and few applicants had been approved for funding yet or had submitted expenditure claims throughout the fiscal year. The higher level of expenditures recorded in the third quarter of 2015–16 reflects the steady growth in the number of approved applications, for which many project-related expense claims were submitted and reimbursed this quarter.

Personnel-related expenditures totaled $5.9 million, an increase of $0.6 million (or 11 percent) from the same period in 2014–15.

The following Standard Objects have relatively low expenditures, so small variances in the dollar value of spending will result in large percentage variances. This is anticipated to normalize during the annual cycle.

There are year-over-year increases in expenditures related to rentals ($4,000, or 25 percent) and utilities, materials and supplies ($5,000, or 26 percent), which are related to the timing of purchases and billing for routine expenses.

Expenditures for professional and special services have decreased ($1,619,000, or 71 percent), which is related to timing of billing for Memorandums of Understanding with other government departments providing services to FedDev Ontario. Expenditures for transportation and communications decreased ($61,000, or 24 percent), which is primarily attributed to higher previous year expenditures for employee relocation files. Spending on information also decreased compared to the same quarter of the previous year ($25,000, or 30 percent).

During the third quarter of 2015–16, expenditures decreased for repair and maintenance ($75,000, or 76 percent), other subsidies and payments ($9,000, or 82 percent), and acquisition of machinery and equipment ($49,000, or 54 percent).

Year-to-Date Analysis

Transfer payment spending has increased by $61.1 million year-over-year, which is attributed to the higher expenditures in grants and contributions during the current fiscal year as projects progressed and incurred eligible costs.

Spending has decreased in the area of transportation and communications ($101,000, or 17 percent), which is a result of higher previous year spending related to employee relocation files.

Repair and maintenance spending has decreased ($112,000, or 55 percent), which is related to the timing of payments occurring earlier in the previous fiscal year.

Spending has decreased in the area of professional and special services ($1,047,000, or 35 percent) and can be attributed to the timing of payments for Memorandums of Understanding for services from other government departments.

There are increased expenditures related to acquisition of machinery and equipment ($146,000, or 140 percent) and utilities, materials and supplies ($29,000, or 63 percent). These increases are primarily attributed to the relocation of FedDev Ontario's headquarters. Spending has also increased in the area of personnel ($873,000, or 5 percent).

Other subsidies and payments expenditures have decreased by $663,000, or 100 percent, due to increased previous year spending related to the implementation of pay in arrears by the Government of Canada.

3. Risks and Uncertainties

FedDev Ontario conducts an annual risk assessment process to update its corporate risk profile. FedDev Ontario is actively managing the risks identified in the previous year related to the expenditure of transfer payment authorities. For example, a strong system of budgeting, forecasting and controls is in place to help mitigate financial risks relating to the Agency's funding authorities.

4. Significant Changes in Relation to Operations, Personnel and Programs

On November 4, 2015, the federal government announced that the Agency is now a portfolio partner reporting to the Minister of Innovation, Science and Economic Development.

 Approval by Senior Officials

Original signed by

space to insert Nancy Horsman signature
Nancy Horsman
President
Waterloo, Canada

Original signed by

space to insert Susan Anzolin's signature
Susan Anzolin
Chief Financial Officer
Waterloo, Canada

Statement of Authorities (unaudited)

Statement of Authorities (unaudited)
Fiscal Year 2015–16
(in thousands of dollars)
Fiscal Year 2014–15
(in thousands of dollars)
Total available for use for the year ending March 31, 2016Footnote 1 Used during the quarter ended December 31, 2015 Year to date used at quarter-end Total available for use for the year ending March 31, 2015Footnote 1Footnote 2 Used during the quarter ended December 31, 2014 Year to date used at quarter-end
Vote 1–Operating Expenditures 27,161 6,118 17,633 27,318 7,359 18,551
Vote 5–Grants and Contributions 186,240 40,086 84,108 177,632 11,662 22,995
Budgetary statutory authorities 3,153 787 2,364 3,095 774 2,322
Total authorities 216,554 46,991 104,105 208,045 19,795 43,868

Table 1: Departmental budgetary expenditures by Standard Object (unaudited)

Table 1: Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal Year 2015-16
(in thousands of dollars)
Fiscal Year 2014-15
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2016Footnote 1 Used during the quarter ended December 31, 2015 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2015Footnote 1Footnote 2 Used during the quarter ended December 31, 2014 Year to date used at quarter-end
Expenditures:
Personnel 22,893 5,871 16,978 21,884 5,270 16,105
Transportation and communications 985 198 480 847 259 581
Information 240 58 128 164 83 131
Professional and special services 4,658 667 1,947 5,671 2,286 2,994
Rentals 388 20 49 164 16 47
Repair and maintenance 596 24 90 131 99 202
Utilities, materials and supplies 130 24 75 74 19 46
Acquisition of land, buildings, and works 38 - - 5 - -
Acquisition of machinery and equipment 365 41 250 200 90 104
Transfer payments 186,240 40,086 84,108 177,632 11,662 22,995
Other subsidies and payments 22 2 - 1,273 11 663
Total budgetary expenditures 216,554 46,991 104,105 208,045 19,795 43,868

Footnotes

Footnote 1

Includes authorities available for use and granted by Parlimament at quarter-end.

Return to footnote 1 referrer

Footnote 2

Planned Expenditures and Total Available for use for the year ending March 31, 2015 has been restated from previous year third quarter report to align with Treasury Board Accounting Standard 1.3.

Return to footnote 2 referrer

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